Importance of PAN Card in CIBIL Score Assessment

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When a credit user applies for a new credit card or a loan, one of the first things that their lender does is assess the creditworthiness, repayment capacity and payment track record of the applicant. The metric that perfectly encapsulates these things is a person’s CIBIL score.  

TransUnion CIBIL collects information from banks and other financial institutions on the millions of credit users across the world. It then studies this information to assess a credit user’s attitude towards credit, their dependency on it and the likelihood that they will default on credit repayment in future. Based on their assessment, TransUnion CIBIL assigns a credit score to every credit user which it calls the CIBIL score.

The CIBIL score can range from 300 to 900. The ideal CIBIL score range for a home loan in India is 750 to 900. Individuals with such a CIBIL score are identified by lenders as low-risk borrowers. Lenders are keen on doing business with such borrowers and therefore, loans are extended to them on favourable loan terms and conditions, including low loan interest rates and higher loan sanctions. 

Individuals should check CIBIL score regularly and ensure they have a good credit rating. Doing so would allow them to access credit easily and on the most beneficial loan terms and conditions when needed. 

Now that we understand the basics of the CIBIL score and its assessment, let us familiarize our readers with PAN. 

What is PAN? 

PAN refers to a Permanent Account Number. It is an alpha-numeric identification number that the government of India assigns to the citizens of the country. PAN is unique and so, no two individuals can have the same PAN number. The government of India introduced the concept of PAN to reduce cases of tax evasion. 

There is a very common myth that PAN affects a person’s CIBIL score. The fact is that changing information on your PAN card, such as your date of birth, address, etc., will have no impact on your CIBIL score. That said, all credit users should link their CIBIL account with their PAN. Here’s why. 

Importance of PAN Card in CIBIL Score Assessment 

Here is how your PAN card helps with CIBIL score assessment and some reasons why you must always link your PAN with your CIBIL account. 

  1. TransUnion CIBIL maintains records on millions of credit users. Since a PAN number is unique and no two individuals can have the same PAN number, linking your PAN with your CIBIL account will ensure that your credit information and credit profile do not get mismatched with someone else. When you apply for a loan or a credit card, your lender will approach TransUnion CIBIL to enquire about your CIBIL score and decide whether or not you should be granted a loan. A credit profile mismatch can affect the chances of getting approved for a loan if you are someone with high creditworthiness but are matched with the credit profile of a credit user with low creditworthiness. PAN helps avoid such mistakes. 
  2. One of the most reliable ways of checking one’s CIBIL score is through TransUnion CIBIL. Further, credit users can access their CIBIL report only through TransUnion CIBIL. However, to access your credit score and report, you will have to authenticate your identity first. Linking PAN to your CIBIL account is one of the easiest and quickest ways to authenticate your identity and access your CIBIL account. 

Credit users and those planning to apply for a loan should check their CIBIL score at regular intervals, and if their query delivers an unsatisfactory result, they must act immediately. Maintaining a clean repayment history and a low credit utilization ratio will help you improve CIBIL score. Further, having both secured and unsecured loans will also have a positive impact on your CIBIL score range as having a healthy credit mix establishes one’s ability to handle all kinds of debt. Individuals working on repaying their loans should refrain from making too many loan applications and credit card enquiries simultaneously. Doing so might make your lender see you as a credit-hungry and high-risk individual. It will also impact your CIBIL rating. 

To sum up, maintaining a good CIBIL score is important, and so is linking your CIBIL account to your PAN card to avoid a profile mismatch.  

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